DAN TAPIERO: Bitcoin was down 85% from the high and as an
old time macro guy,
you’re looking to buy things that have gone down 85%, 90%
after a blow-off. That’s what it is.
I think it’s a security truth machine.
Okay, well, Amazon, that’s worth a trillion dollars itself
stuff on the internet.
But is that as valuable as a new invention for humanity?
RAOUL PAL: One of my key ideas is that within this
recession scenario that I think is building,
that gold and Bitcoin are going to be two of the assets
that perform extremely well
because they’ve become options on a more extreme monetary
So, I wanted to speak to one person who brings both of
those themes together.
He happens to be one of the most experienced macro people
in the entire world.
He’s touched and worked with a lot of the greats of the
industry, and he has a unique perspective.
And he’s been hassling me and hounding me for about six
months now that I need to get back involved in Bitcoin.
And when Dan, who’s not a Bitcoin guy originally, starts
doing that to me,
he’s got a reason because he’s a pure macro player.
So, I really want to hear what he’s thinking here and how
this fits into my broader narrative.
Dan, finally, we get you back.
Your previous videos were cult watching for a lot of
people because you’re one of the pure macro guys.
And I was doing this whole thought process about recession
and bits and pieces.
I’ve been thinking the Bitcoin was part of what I’m
looking at within that framework.
And you and I separately, have been talking about it and
you’d been hounding me from about February onwards,
saying, come on, Raoul, you got to get back into this.
Before we get into your thought process and how you’ve
applied your own macro framework
into building your Bitcoin thesis, it’s just people
because many people wouldn’t have seen you from the
just to go back over some of your background.
And the reason that I like to pick your brains and stuff
is you have a background almost unparalleled
from anybody I know. You’ve worked with the greats of the
industry, whether it was Julian Robertson at Tiger,
Stan Druckenmiller, whether it was Steinhardt, whether it
was Jacob Rothschild,
whether it’s Stevie Cohen, the list is endless.
And you get all their perspectives from working and seeing
how they all trade.
You’re also a bit of an entrepreneur. You started a gold
business, which was a crazy idea when you did,
when you started it. But now, it’s really interesting,
Gold Bullion International.
GBI is really interesting business. You even started, I
think, the largest farming real estate business
in the world with Stan Druckenmiller and managed to punted
on to the Canadian pension system,
I think it’s now resold to Bill Gates, I think it is.
Your perspective is just extraordinary, and then that’s
why I trust you’re a macro guy through and through,
you’ve lived and breathe this stuff.
And when you start hounding me by email every day, almost,
somehow, Bitcoin, Bitcoin.
Okay, what the fuck is going on?
DAN TAPIERO: Yeah, thanks for that. Thanks for that intro.
Yeah, I know, we haven’t- over the years- talked that much
You’re one of the guys who back in ’13-’14, I think put it
on the map, at least for the macro community.
You were very bullish very early. And I was also involved.
Early through GBI, we had in 2014, integrated with the
which allowed clients to buy and sell ripple in Bitcoin to
buy and sell physical gold, as well as other metals.
And so, that was a whole year long integration.
And going through that process, I realized, wow, this is
something, it could be big,
or the company’s going to make revenues.
And unfortunately, what happened was that it started well,
but it never really became a big revenue driver.
I can’t say why exactly.
But the physical gold company then also moved into other
areas, I guess, within crypto.
And even today, I think we just launched-
I think there are only two places where one can buy
bitcoin in one’s IRA and we partnered with Equity Trust.
And now through Equity Trust, you have the ability to buy
actually more than just Bitcoin
but some of the other crypto as well.
So, it’s been part of our DNA a little bit at GBI.
And so, through that and through of course, you’re writing
and also, the guys-
there are other macro guys of my vintage who moved into
crypto. I know.
Dan Morehead, and there’s Novogratz and John Burbank and
so the smartest guys,
the best guys my age all moved into crypto, and so there’s
something going on.
And I did my reading, I did my work, but I never really
quite committed to the concept.
So, I was dancing around it, but I never did the deep dive
that would give me the confidence.
And then in ’17, of course, you see it running but at 2000
or 3000, you decided to sell your position.
So, I’m thinking there’s no way I can buy here-
RAOUL PAL: Because you were at that round table
when we started getting feedback from the guys who are
very early adopters.
From Chad- from Emil, sorry. He’s like, wouldn’t feel a
bit cautious here. Rocketing.
DAN TAPIERO: Right. I missed it, and that’s fair.
But earlier in the year, January, February, March, as you
had said, Bitcoin was down 85% from the high
and as an old time macro guy, you’re looking to buy things
that have gone down 85%, 90% after a blow-off.
And it’s binary then, either it’s a bankruptcy or a fraud,
or that’s the bottom.
And so, I said, okay, here’s the chance, I don’t think
it’s a fraud. I’m going to buy some.
And so that started a process of deep digging and
And I probably, in that period, and that was when I was
shooting you because I needed some confirmation-
RAOUL PAL: Focus on this, I’m looking at the recession.
You’re like, Bitcoin, Bitcoin.
DAN TAPIERO: Right. And I understood that, and I was with
you on that.
But that started a process, I probably spent 400 to 500
hours reading, listening to podcasts.
There’s some really excellent work out there now
available. That wasn’t five years ago.
In terms of explaining what is Bitcoin? What is this
phenomena? What is it?
And what I’ve come to see is that almost every person has
a slightly different definition for what Bitcoin is.
And I think that that’s contributed to making it very
difficult to adopt easily.
And so, what do I mean by that? So, I thought, okay, let’s
get down to the very essence of this.
Yes, I understand digital payments, store of value,
reading all this stuff.
But what Bitcoin really is, is that white paper, and you
go back, and you read this thing,
and I don’t understand even half of it. But what you
realize is that this is a great invention.
It’s not a coin. It’s a system.
It’s not a blockchain and maybe it’s an invention akin to
the motor engine, or invention of electricity.
It’s something potentially a new organizing principle for
And part of the problem was that people, when they start
really digging into Bitcoin,
they end up saying these kinds of things, which really
puts everyone off,
because you’re thinking, well, this is a madman changing
the world, all of this stuff.
So, as a macro guy, I come at it, macro investor, I’m
thinking, well, what’s the value of it? What’s it worth?
The difficulty I always had was trying to put a value on
I need to know what I think it’s worth today, and what I
think it’ll be worth in three, four or five years
and have a proper fit framework.
And I found that very difficult in ’14, even listening to
some of our contemporaries talk about it.
I didn’t quite get it.
It’s because Bitcoin is a lot of things. So, what it is,
is it’s an invention.
And I think it should be referred to as an invention,
rather than all the other things.
What it really is, is it’s a truth machine.
It’s a way, in a way, to eradicate all fraud, or lined by
The whole bigger concept of certainty, of confirmation, of
validity, of security.
That’s what you’re buying- a system that now is 10 years
old, has a tremendous track record.
And I’m thinking, well, what’s that worth? What is a
security platform like that with that track record?
What is that? What’s the value of that? And I think back
in the early days, it was very hard to get a sense.
You have something that has a $3 billion market cap. Who
cares for my perspective?
It would have been great to have bought it at $10, or $50.
But I think that really was the realm of the VC.
I never would have had that vision, the Tim Draper early
It was just -I remember going down to Barry’s office,
Silbert, in 2013-’14,
and he says, Dan, have this product, and we’re trading
like $2 million a day.
And I thought $2 million a day, that’s not anything. It’s
not a store of value. It’s not anything.
So, that’s just from my perspective.
And again, just given where I was coming from, would have
been hard to really grasp to be all in,
a white paper, it just all was completely different, a new
And also, you had the fraud component, and Mt. Gox, and
all of this, really the first five years.
So, that kept away, I would say, traditional macro people,
but also just people in general.
I think that that kept people away from it. And said, oh,
I don’t have to bother with.
But for me, it was, I don’t really understand how to value
So, here I am, I’m going back in the beginning part this
year, I’m thinking, okay, it’s gone down 85%, 90%.
I know it’s real. How do I value it? What are the- so,
what’s this security truth machine worth?
RAOUL PAL: Security truth machine.
DAN TAPIERO: That’s what it is. I think it’s a security
And the Bitcoin really is just the reward that the miners
get for guaranteeing the security of the framework,
of the network. That’s what it is. Now, if you think about
what would it cost for a company to build that?
If that belong to one person, it’s hundreds of billions of
Think about all the man hours, think about all the people
who volunteered their time?
What is that worth? All that time?
RAOUL PAL: That’s really interesting thing.
Because you and I know the amount- the sheer amount of
intellectual capital- programming capital,
the amount of people working on this space is
unbelievable. I’ve never seen anything like it.
DAN TAPIERO: Yeah, and I’m really just sticking to Bitcoin
for the moment.
RAOUL PAL: Even within Bitcoin, the amount of development
and intellectual capital that’s involved is huge.
DAN TAPIERO: Over these years, like, what would it cost to
It’s truly a massive endeavor, something that can touch
every single human being on the planet,
all they need is a phone. It’s incredible- could a company
even develop that?
And maybe Satoshi realized it could only be developed
slowly over time, in a decentralized way.
Because the current, the structure of the way a
corporation works could never work fast enough.
This thing is going 24/7, not just the trading of it, but
the maintaining of the system.
And all the mining that’s going on, it’s constant.
Part of the problem, I think, in the early days, is that
it’s hard to really believe as an investor
that someone invented something unique and gave it to the
world for free.
And so, it was valued at zero in the beginning. If it had
been within a normal company structure,
it would have grown to some degree and you would have had
and maybe it would have been worth more than we work,
which is 50 billion
or I don’t even know how you compare it. But I’m just
saying that I think it took a while to adopt
because it didn’t make sense that if you had done this
and you could realize the nature of the invention early,
to think that this could be worth trillions of dollars, it
was too far, I think too far a stretch.
Not for the VC people maybe, not for the private equity
people, not for the technologists, I think,
who got in earlier and then maybe not for the smart macro
guys who we’ve mentioned who are actually also in.
You can get to numbers very reasonably that are- the
Winklevoss number is a million on Bitcoin
and Draper’s 250,000 within five to eight years, you can
start to see it because you say,
okay, well, Amazon, that’s worth a trillion dollars itself
stuff on the internet.
But is that as valuable as a new invention for humanity?
And that is applicable to almost everything we do
RAOUL PAL: But most people don’t see that. Can you talk a
bit about that?
Because they just think- most people are still stuck with,
well, somebody’s created something that they claim has
value and there’s a lot of the naysayers
who would say that, but you’re saying something so huge.
explain a bit about the hugeness.
DAN TAPIERO: Yeah. And this is part of the problem and the
hurdle for Bitcoin is that it takes so much work
and so much digging. Of every piece I’ve read, I probably
only understand, at the beginning, 30% and 50%.
And then maybe 70%, I still can’t understand the details
of the white paper.
However, I’ve spoken with people, in one case, a founder
of paid pound, another case, a genius cryptographer,
and they all say that it is genius. And so what’s behind
the genius? He solved the Byzantine General’s problem.
And so, that problem had not been solved ever. People had
been trying to solve that problem.
RAOUL PAL: Explain that problem.
DAN TAPIERO: So, that’s the problem of trust, not having a
central authority verify a communication
between you and I. So, having a third party that we both
trust verify our interaction.
So, it was very difficult to figure out a mechanism to
build a solution to that problem
with a real world application. And so, what’s something
Again, the macro guy, what’s something worth that solves a
problem that they haven’t been able to solve
for hundreds of years? And the reason is, is that it’s so
multi-disciplinary, it’s financial,
involves cryptography and computer science, and sociology
and psychology, and economics.
And to be honest, I don’t think Bitcoin would have been
invented without ’08.
Because in ’08, the trust was lost. The banks basically
failed, and they were saved.
And there were people who were saved that shouldn’t have
Now, my response to that crisis was okay, unfortunately,
backward looking, being a historian myself,
I’m going to create a gold company, physical gold company,
where that stores gold outside the banking system that is
fully allocated, where you have your name on it.
And in a way, that was my like-
RAOUL PAL: That was your macro bet. So, holding it.
DAN TAPIERO: That was my solution to I need-
RAOUL PAL: A broken system.
DAN TAPIERO: Right. I need a way, I want to have some
allocation to that, because I’m concerned about that.
Not in the realm of the technical genius to solve a math
problem that hasn’t been solved for hundreds of years
to turn that into a functioning system with incentives.
That’s part of this.
RAOUL PAL: It’s like behavioral economics is all rolled
DAN TAPIERO: That’s right. So, how do you get someone to
maintain the integrity of the system?
How do you get millions of people and millions of bits of
Using all of this energy, how do you convince someone or a
decentralized group to say,
hey, we’re all going to work towards the security of this
new platform? How do you come up with that?
Well, there’s real math behind that.
And so, this is a mathematical solution to the trust
problem created by ’08.
So, again, GBI, my company, we figured an- ’08, I had the
And we launched in March ’09, the white paper came out in
And then unfortunately, it was way over my head.
But of course, that was the right macro response to the
crisis, which also makes me think that Satoshi
had a very advanced sense of the macro, because it was
only our crowd that talked a lot about fiat.
Fiat currency and gold and debasing the currency through
quantitative easing and negative interest rates,
well, of course, so we all thought, oh, yeah, gold.
But for someone to have understood that deep macro
as well as all of the computer science and cryptographic
aspects, that does not exist in any person who I knew.
So now, all of a sudden, you hear every Tom Dick and Harry
on Twitter Bitcoin talking about fiat this, I don’t want
my fiat that.
And it’s 10 years later, but it used to really just belong
in the realm of the macro.
So, it’s really a phenomenal person or group of people who
brought all of these pieces together.
And so, Bitcoin, people are like, well, okay, Dan, that’s
We knew that 10 years ago, you’re not saying anything new
to us. I’m like, yes, I know.
But for the macro community, and for investors at large,
institutional investors as well,
and they’re way behind- they need a language to understand
what Bitcoin is.
It’s so confusing when you listen to these different
people. Often, there’s a lot of hype.
Even like Antonopoulos, who’s written his two books, I
read the last one recently,
it’s a brilliant book, but you have to really go through
it. You have to pull things out of it.
You have to constantly be upgrading your knowledge,
because it’s also evolving,
and they’re in this constant innovation. But, as I said,
every person describes it differently.
RAOUL PAL: It’s because it’s an entire system.
It’s an entire architecture, infrastructure and system all
combined. So, it has attributes of many things.
DAN TAPIERO: Right. That’s exactly right.
RAOUL PAL: What is society is asking philosophical
questions. It’s actually a philosophical question.
What is Bitcoin?
DAN TAPIERO: That is right. That is right.
And that’s hard for people who are looking for cash flow,
or EBITDA, or whatever it is to value.
Macro guys value things all the time that have no cash
flow. Gold is one.
Bunds now certainly have negative cash flow. I don’t know
who could buy bunds.
But anyway, the point is, is that this isn’t just valuing
something with no specific cash flow right now.
But you know in the future, there might be. It might be
that at some point-
there’s so many places that it could go, and I’m not the
right guy to start throwing out the possibilities
and all the use cases, I’m trying to think of what is this
platform worth it?
I think, eventually, part of the value is that it is, if
it need be, traceable back to somebody somehow.
And we’ve seen this. We’ve seen with the FBI,
if they think that there’s some fraud or something- they
cannot in all cases, but they can go back.
Physical gold is more difficult.
My only point is that gold, it’s a hedge in the
traditional system for the traditional system.
Stocks, and most people who are long stocks and bonds,
gold is a good hedge.
And now with rates close to zero, if we go through this
thing, where US 2-Years are going back down to 2%,
you don’t have a real hedge. It’s not clear to me that
Bitcoin access that hedge. It can.
But what I’m trying to say, is that Bitcoin really is
something much bigger than that.
And to just be comparing it or gold and Bitcoin are
cousins. They’re both alternative currencies.
That right, the value part, the part that trades on the
screen, they’re alternative currencies.
That one little part of Bitcoin, Bitcoin really is
So, I’m not sure why everyone is comparing Bitcoin and
maybe they think it’s an easy way for people to understand
it. But that’s not an easy way, it confuses it.
I think if it were presented as this invention of a new
system, and if it were articulated in the right way,
I think it would make adoption easier and quicker.
And so this leads me to think the greatest need in the
again, from a macro guy perspective, not someone who’s
involved, the nitty gritty-
the leaders in the area need to either come together, is
it Coin Center, which is the advocate in DC-
maybe each of them have to put in $5 million into a pot,
and they have to develop a proper marketing and
And I think this is important in DC as well, because this
is something that the US could-
it’s going to be a huge growth mechanism. I think
potentially could create a huge number of jobs.
And right now, there are antagonistic people in the
leadership. I think a lot of people.
They haven’t done all of this work, and they’re listening
to these little bits of information
from different people, and they have the wrong idea.
And so, an education marketing mechanism funded by- these
guys are making a fortune now-
I think is the way to build something that removes the
general hostility from at least the politicians here,
and maybe some of the central bankers.
Once they realize what it is, I think they should actually
create tax incentives
to get people to buy in somehow, whether it’s buying a
little Bitcoin, whether it’s- they could make-
you remember Amazon, for the first 15 years of its
existence, there was no state tax law.
There’s no state or local tax on purchases, it was a gift.
The first $10,000 of Bitcoin purchases should be tax-free
or something like that.
Because this is a- as I said, it’s a whole framework that
is hard to understand,
I think only a little bit, makes it easier.
And like I haven’t even talked about all the tremendous
work that’s going on underneath and above Bitcoin.
Underneath I mean Ethereum and all these other ICOs. There
are tremendous projects.
There are there are 100 exchanges.
This ecosystem as they like to go, but I think it’s more
of a model macro system.
RAOUL PAL: I think it’s a whole parallel system, financial
system and everything else.
I just think it’s a whole parallel system being built in
front of our own, the one that we’ve been asking for.
There’s a lot of people still too cynical to realize what
is going on in front of everybody’s eyes,
which is Plan B is rapidly becoming Plan A.
DAN TAPIERO: Yeah, but I don’t think it necessarily that
they’re cynical, or necessarily that it’s Plan B.
It’s the future. Meaning and some people are resistant to
And others aren’t. Like take Tim Draper, he’s a very smart
guy. He was very successful before Bitcoin.
And I almost think he’s so enthusiastic that it may be
puts people off.
RAOUL PAL: He was on Real Vision. And the same thing-
DAN TAPIERO: But he’s phenomenal.
RAOUL PAL: He was too enthusiastic. People are like, well,
I know, but-
DAN TAPIERO: I know, but he’s phenomenal. He’s right.
It’s just getting the message across in an organized way
would really help. And for me, I hear-
RAOUL PAL: Well, how do you do that with a decentralized
system? It’s decentralized by nature.
So, maybe the interesting thing is this development, that
everybody’s going off in different directions.
And that in itself is creating the whole, much larger than
if everyone was organizing in one particular way.
DAN TAPIERO: Yeah, no, no, I agree. And I think that’s
And that’s the robustness of this platform is that it is
and that it can’t be shut down by anyone one jurisdiction.
But look, I’m an American, we’re here in America, I think
it’s a great country.
And I would want us to take advantage of it. And I think
we could be the leaders, easily be the leaders in it.
And if the government got behind it a little bit in terms
I know, this is like heresy for the Bitcoin crowd.
But it would be nice for the average guy on the street
who’s 60% equity and 40% in bonds
and has his savings all locked up and these things to not
just educate him,
but really even incentivize him to expand his brain a
because that’s the real difficulty is that it takes a long
because they’re all of these different businesses. Not
just the ones that have- where there are tokens.
But they’re also all these private businesses, hundreds of
private businesses that are doing different things
within this world that are phenomenally interesting. And
they don’t all make money, they won’t all survive.
But it’s very robust. It really is robust.
And I think anyone under the age, really, of 30, should be
moving into this area.
And I don’t think you really have to be a computer genius
or a programmer, I think they need people-
this, I don’t want to call it industry, but this area
needs people who can bring things to market, who can-
I think some of these small companies have brilliant ideas
but don’t know their customer well enough.
They’re not- they need sales and marketing people.
And I think you’re going to have that come from maybe it’s
from some of the Deutsche Bank type people,
but I also think it’s more creative people, not just
people who are on a phone doing a transaction.
RAOUL PAL: So, when you look at the macro landscape, and
you see this,
is this just dwarfs everything else in macro opportunity
DAN TAPIERO: Yeah. So, the thing is, you have to be
careful with hyperbole because the answer is yes.
But if you start out with that, people think you’re nuts.
And especially my- all the guys I work for,
I think people over the age of 50, okay, or maybe even 40,
45- have a really hard time,
because we’re also used to snatching up these little
phrases from Facebook,
or from Twitter, or from the newspaper article. And very
few people have digested the whole thing.
And so, you hear these for all digital gold, and then so
someone who owns gold will say, oh, that’s crazy.
I’m never selling my gold for this thing that’s up in the
Like, I don’t know what this- that’s crazy, or, but I
just getting back to the gold thing for a second, I just
think those are the people,
they shouldn’t be being attacked, those are the people who
are going to be the first adopters
from the next group of people,
because they already understand the concept of debasing
fiat and an alternative currency.
The people who are long- those are your cousins, they
shouldn’t be attacking them,
they should be trying to even almost combine with them.
Because they’re similar mentality.
It’s the people in the traditional investment space who
are nowhere near that they don’t talk about fiat,
they don’t understand what’s going on with monetary
So, they don’t even get the macro, and then you’re trying
the Bitcoin people are trying to then not just explain the
but then overlay the super complex infrastructure network
on top of that, in terms of explaining why.
It just becomes very, very difficult and murky.
RAOUL PAL: That’s why I think it’s interestingly, we
looked at the trend of the people,
the brain drain out of macro into this is huge.
And the interesting one for me, because he is that
communication is just scope.
Because is Mark is actually really good at explaining to
institutional people what it is,
because, Mark- yes, he’s incredibly personal. And he gets
across very well. And he’s a great guy.
But he also understands how big a macro opportunity was.
It labels like, okay, this is it, let me shift this entire
business to this.
And he can communicate, hopefully, with at least some of
the institutional guys to get them to understand it.
DAN TAPIERO: Yeah, but you need 1000 of them.
And I actually think it’s a very small, a small group who
have switched over.
RAOUL PAL: Dan Morehead was the first of all the people I
There was a bunch of guys, Chad and Emil who were GMI
guys, and you know as well, ex-Goldman guys,
they were extremely early, maybe even earlier.
They were Bitcoin-mining from their office because they
got free electricity.
And then it started, then Nova, I think, and then John
Burbank was super interesting.
Even Alan Howard’s got Bitcoin group-
DAN TAPIERO: But it’s very small.
RAOUL PAL: Jim Pallotta- I know. But what’s interesting is
these are really, really respected people.
DAN TAPIERO: Yeah, yeah. Yeah, for sure.
So, the people in politics and the leadership, and I would
say, even the leadership of the top companies,
where a lot of capital resides in the traditional world,
they don’t know these people,
and they’re very far away, and they’re not connected.
And this is an opportunity for you, I think, to create a
platform to reach out to the more traditional
investment world, explaining to them what is going on, and
why it’s important.
And there aren’t that many people who I think sit in the
middle of all of that.
You have a few people who are asking questions, but even
there are a lot of VCs, very good macro understanding.
But it’s not the same thing. So, I think there’s real need
now. And I think it’s, there’s a lot of value there.
RAOUL PAL: Yeah, that makes total sense.
So, look, it’s a really big universe, because it’s not
just Bitcoin, but your particular attraction right now.
And knowing you, it will change over time as you discover
new things is, you’re saying,
okay, the one bet that you can have is Bitcoin.
DAN TAPIERO: Yeah, yeah.
RAOUL PAL: But what do you think of, therefore, these
other parallel universes.
They’re all part of the same digitization of the world,
which I wrote that big GMI article this month about it,
but digitalization of all assets,
and therefore, the value of everything that’s digital now.
And this is the architecture for all of that.
So, how do you think about that world of Ethereum and all
the gazillion other currencies, tokens?
And so, I’m trying to figure this all out.
DAN TAPIERO: I think there’s tremendous value.
I think if you’re new to this space, and you want to get
involved, Wences Casares, yeah.
He wrote this piece three, four months ago, that was
He says, put 1% of your net worth into Bitcoin if it goes
to zero, whatever.
If not, I think he almost said at one point, this is a few
years ago even-
it was irresponsible not to have 1% of your portfolio in
And, again, I think you should have a lot more. But that’s
a good way to begin to think about it.
RAOUL PAL: The other person that’s also involved in this
is Mark Hart. Mark says it was a good thing to-
DAN TAPIERO: Yeah. And I listened to your interviews with
Mark in ’17. He was right on.
Everyone creates, because it’s so hard to define in one
sentence, everyone says well,
Bitcoin is like this, it’s like the rails for the world,
or Bitcoin is like gold and Litecoin is like silver.
They’re trying people- we’re still trying to define it and
I think there are lots of opportunities,
but I don’t think that unless you’re going to do a lot of
and you’re going to be able to do as much work as someone
who spends their entire life on it,
I don’t think you go in and just buy Bitcoin, gold or
chain or any of [inaudible] or any,
there are a lot of valid enterprises, but I think you can
just stick to Bitcoin as an entry,
because that’s the innovation, the invention.
These other things in it, but look, Ethereum is- again,
I’m not the right guy to talk about this.
But it’s programmable. You could do lots of things.
The second layer at the conference, I heard there was a
guy talking about how he threw-
there’s the lightning system, which increases the speed of
transactions of Bitcoin,
but also, that you can build a settlement feature into the
second layer above Bitcoin.
I’m not sure exactly what he meant. But I listened to the
And I listened to it again.
And I took it to mean that okay, well, Bitcoin has more
flexibility than at least some of the naysayers.
There are a lot of naysayers out there, who say, oh, it’s
too slow. It’s too clunky.
Again, that’s part of its strength, the solidity. And then
as time goes on, it becomes more and more secure.
And the price of securing that network goes up in value
more and more, it’s almost exponential.
RAOUL PAL: Well, it is exponential. It has been
DAN TAPIERO: That’s right. And so, I want to get back to
the value thing for a second-
RAOUL PAL: Yes, because I want to come back to that as
DAN TAPIERO: So, you say, so what can this thing be worth
and it’s now $200 billion in market cap.
But that’s small. It’s small if you- not even- if you just
see what’s been built,
like it would cost more than $200 billion to build that.
So, you can start to think that within 10 years, the
Winklevoss’ million dollars
or Draper’s 250,000 in the next few years, it’s not
unreasonable. And so, what is the bet?
The bet is to buy and to do nothing else. That’s it.
Unless you’re going to be involved in like a fund
business, you’re going to be trading this and that,
but I don’t even think that’s- I think that’s not really
RAOUL PAL: So, you become the holder, the classic-
DAN TAPIERO: I know, I know.
RAOUL PAL: I can’t believe I’m hearing this from you.
DAN TAPIERO: I know. I know, I can’t believe it myself,
because I wasn’t here six months ago.
RAOUL PAL: No, I know. You were interested, but you
DAN TAPIERO: I was interested. But when it was only that
the price went down so much that I thought,
okay, now, I can have some way to figure out my risk
reward, but then I bought it 5000, 6000, 7000, 8000.
If it can go to that number, and I’m going to hold for 10
years, then even here, you can buy,
but you have to be- Look, everyone is saying oh, well, but
you have to be willing to risk for it to go to zero.
And that even I remember even reading Dan Morehead, it was
in the Wall Street Journal,
it was either January 18, or December 17. And he said it’s
a new technology.
But you have to be prepared that it could go to zero.
And I thought that always stuck in my head. And then as it
kept going down,
and then you see all the businesses forming, and all the
infrastructure building and you do all the work.
I don’t think it can be. It can’t go to zero.
And he probably would say that now, too. In fact, maybe
there’s some superior system that comes down the road.
But this has a 10-year track record of proving that it’s a
bullet proof security truth machine.
And so that’s totally new. And what’s that worth? Well,
Draper and Winklevoss and those guys.
RAOUL PAL: So, the other one I’ve been interested, and I
talked to you about it the other day was I came across
this guy Plan B on Twitter, this hundred trillion dollars.
And what he did was a stock flow model.
Again, I couldn’t understand any of his mathematics.
I’m going to get him on Real Vision because- I’ll do it
anonymously. He’s based in Amsterdam.
I don’t know who the hell he is. But it’s like,
everybody’s been struggling with the valuation tool.
And this guy, an anonymous guy, middle of nowhere, just
dumps this complex math and go, okay,
here’s how gold works in the stock flow model and here’s
silver because it’s industrial,
puts it on a linear regression and shows you that Bitcoin
is operating on an exponential increasing level.
Like, I’m like, holy shit. This is super clever. Because
he’s even cover value in gold.
He’s solved the valuation of gold problem in the whole
equation, without even thinking about it,
just by solving the Bitcoin valuation.
So, from him using the exponential log scale of where he’s
going, he’s like, okay,
the next halving because of what that does for [inaudible]
coins, he goes, okay, the next halving is 100,000.
And it’s like, before you know it, this thing is worth 100
But I get this, that’s worth 100 trillion dollars when the
mining stops, that mined all the Bitcoin.
After that, what’s it worth? Because then, it’s an entire
system in itself.
Because at 100 trillion dollars, okay, you’ve got an
DAN TAPIERO: Well, what’s the total world money supply?
No, I think it’s 80 trillion or something.
I don’t know the world wealth. I think people are trying
to compare it to those numbers.
Look, I don’t know that you can do that.
But it seems to me that money supply is just dollars or
currency in the system. That’s not that ingenious.
So, you can get to those crazy numbers.
But I don’t see- like there’s too much time that I think
it will take-
let’s say it takes 10 years, there’s so many innovations
and changes and things that will happen in 10 years.
RAOUL PAL: Yeah. And that’s not macro timeline, that’s VC
DAN TAPIERO: And there are lots of them.
I didn’t talk about them, but there are lots of ways to
value Bitcoin that are just internal to its own
ecosystem like that, without taking it outside and saying,
what’s this invention worth in the history in the scope of
the last hundred years, whatever it is.
And there are thousands and thousands of people doing work
on this. That’s the power of it.
Normally, you’d have the 10 smart guys at 10 different
brokerages or something
doing interesting macroeconomic work, you literally have
thousands of people thinking about this
all over the world. Amsterdam, you have this interesting
company BitPay doing payments in Africa.
And that’s a whole other thing.
And there’s so many applications, we haven’t talked about
this at all. And some of them are there now.
And some of them aren’t. And some make money, and some
But the scope, so here you got, now, I said, oh, it’s
bigger than anything we’ve ever seen.
And so, the problem is, you say things like that, and
RAOUL PAL: But it’s like describing the internet back in
the ’80s. It’s very difficult to describe.
DAN TAPIERO: Well, so I had a thought- well, it wasn’t my
thought, I read it somewhere, that someone said,
you know how the internet was created- not created- was
the uptake, the usage
and who would have thought that the number one thing that
the internet is used for is watching cat videos
and streaming video. And he said, well, wouldn’t it be
if the internet was just the base for allowing the Bitcoin
framework to exist, that in the end, the function
of the internet will have been to sustain and maintain the
Bitcoin world, the invention of this new system?
And so, that may be years from now, we’ll be saying, well,
that’s, of course, why the internet was invented.
Or not invented- that was the use case for the internet.
Was Bitcoin, not streaming.
Yeah, selling stuff online, like, oh, my gosh, we could
have figured that out. Amazon.
And I think it’s not a crazy argument.
RAOUL PAL: So, I’m thinking about, I’m worried about the
And you and I’ve talked about it as well. I know where you
stand currently on this.
But one of my outputs from this is just at a very simple
level, the most simple macro level is we go
from the US come to get rates to zero, let’s say, we have
the ECB then having to do something more extreme.
And we have the BOJ that have to go more extreme again.
That’s the typical pattern.
So, we end up with extraordinary world, whatever that is-
MMT plus, whatever, whatever it looks like.
So, you start to think, well, obviously Bitcoin and gold,
both of them look like great options.
Just options on something. I think Bitcoin has the
potential to be the larger option for the reasons we say,
because you’re basically it’s an option into, as I said,
something entirely different.
DAN TAPIERO: It’s a different bet than gold. It’s a
different bet. Yeah.
RAOUL PAL: And so, that thesis for you holds up as well
from a macro perspective that if things get ugly,
and central banks get- there’s more central bank largess,
then it’s got to be a net beneficiary into Bitcoin.
I know it’s not your reasoning.
DAN TAPIERO: No, I think Bitcoin does its thing on its
Meaning that people will start to realize what I am
realizing what all the people in this space,
who are really committed, what they see.
And so, I think it’s almost on its own- yeah, it’s helpful
if rates go down, gold will respond.
Because I think gold is interesting now, because most of
the world just owns equities, and at least in America,
but also in other places, lots of equity holdings.
And if equities go down, there’s no hedge, because the
bonds can’t really go much below zero,
we’ve seen they can, but that’s not a great hedge, if
you’re concerned about if you see the drop.
And for me, the most important thing going on now, macro,
is this massive drop in prices.
It was a Isom price component, and the last four or five
months, it’s just gone straight down,
I sent you that chart. And that’s a very scary chart.
And it shows that, okay, now, the Fed is nowhere near
but everyone has misevaluated the degree of price
And the Fed knew it six months ago, we never got close to
So, the challenge is how do you get to a place where you
And you have the Amazon effect, and all of that, which is
talked about all the time, that’s real.
I think that’s real.
You have a home advisor think I needed a new air
conditioning unit in the first floor of my house.
And my guy who I’ve had for 20 years quoted me a price. I
thought, that’s crazy. That’s nuts.
I go on to the web, home advisor, the air conditioning
guys who are in my area, I said the problem.
Within 10 minutes, I got a call back, a guy gave me a
price that was 15% lower.
I just went back to my normal guy, I’m like, look, that’s
the price. And he basically said, fine.
So, you’re a great client at Tetrix. So, things like- and
I wasn’t aware of this.
I just said, guy is ripping me off. I know it. If a guy
like me is doing that, everyone else is.
And so, that pressure.
And certainly in Asia, and how adept and facile they are
and so that pressure just continues.
And so, the issue really is, how much can you pump in?
You’re saying MMT or more rate cuts, or whatever it is.
And so, what happens is, is gold does become the hedge for
the traditional world. Because as the rates drop,
it will go up. It is very sensitive to liquidity, changes
in liquidity from the main central banks.
And it has a lot of other things that it responds to as
well. And I think Bitcoin is its own thing.
It will do well in that. But it’ll do well if that doesn’t
happen as well.
RAOUL PAL: So, it’s going up?
DAN TAPIERO: Yeah, well, I think so. I think it’s just
about, look, about having the time and patience
and just having the allocation and not being too cute
RAOUL PAL: All rates going to zero.
DAN TAPIERO: Well, I think they’re going all the way back
down. I don’t know if it’s zero or whatever it is.
But at the round table in California, we had our favorite
And I said my favorite trade was the 2-Year Note.
And it’s pretty much dropped, and I think Stan said he
thinks he could see down to 50 basis points.
You don’t have to listen to me about that. I think that’s-
RAOUL PAL: Stan is telling us.
He’s low and people are like, hey, man, Alan, they’re all
long euro/dollars, two years?
DAN TAPIERO: Well, and also, I think was about a month
ago, Paul Tudor Jones came out and said,
his favorite bet for the next two years is gold. That was
I don’t know if you remember that.
And then it rallied 10%. And it’s now with a six-year
high. I don’t recall- Paul, I don’t know him personally.
But I followed him. And I don’t recall him very often, at
least, having a two-year view being that definitive,
and saying one thing, this is for the next two years. So,
of course, I can come up with my own reasons.
And he has his own reasons.
But I think the two are linked in a way, they’re linked. I
think you’ll have more upside in terms on the gold,
because I don’t think the 2-Years are going below zero.
But they could.
RAOUL PAL: They are everywhere else.
DAN TAPIERO: They certainly could. And again, so
recession, you can still have 1% GDP.
But 1% CPI will feel like a recession, a zero CPI will
feel like a recession, you still could have some growth.
And I hate being so cataclysmic also about it, because it
can happen over for a long period of time.
It could be over the next two years.
The one thing that I think is a little spanner in the
works of that is I think Trump is very aggressive.
I think that the market probably has to be near its highs
going into the election next year.
So, you might get a very severe dip now like you had in
December, last December, and then a panic response.
I don’t think Trump is going to let it and he can do-
basically, he could do lots of things.
There are lots of levers that you can pull to push that
off. We haven’t- ’08, like collapse.
it just seems a little less likely, because we’re so aware
December showed you that, showed that, look, we’ve been
talking about this in March. March of ’18.
China was slowing, they still have a big corporate debt
problem, there’s still a huge overhang,
their problems there now. The 2-Year 2-Year rate of change
of Libor, which was a phenomenal indicator,
anyone watching that should go back to your work and look
at that indicator, you combine those two things.
And remember, we were at what was it?
We were at a restaurant here in the city, and we hammered
this up in March and April.
And then you throw QT on it and all of a sudden, in
But what normally would have led to more of a wipeout
because there’s so much intervention now in the
I think that’s why they’re so boring compared to what’s
going on in crypto. Because things are known.
It used to be it was a handful of guys looking at Fed
policy in the late ’80s.
And now it’s thousands, if not hundreds of thousands. And
there’s nothing there. Like there’s no-
RAOUL PAL: There’s no edge.
DAN TAPIERO: Yeah, you can be long the 2-Year and you can
And if it’s moving up and down month to month, you can’t
manage your P&L based on that. You have to hold it.
I think it’s a good view. But for the moment, until those
2-Years get down to 50 bps- Stan’s level-
or 1%, I think the equity can still hang in there.
So, we don’t go into- it goes down, and especially into
I don’t think we can go into that cataclysmic- it’s all
over. Let’s get rid of the fiat money system.
And just it’s too much.
And these things, as you know, macro always takes longer
than you have ever than you imagined.
RAOUL PAL: So, to get the right answer, it’s actually not
To get the time of these big event, really hard.
DAN TAPIERO: Yeah, but look, you’ve done a good job.
And I think that there are people out there who do it and
do it well.
And look, you’ve been right on this to your call. And I
don’t think you’d suffered that much.
You’ve been right on, like the moments and then you got
back into gold. Also, I think at the right time.
And now, I think you can have that position until Tudor,
until Paul comes out and says, okay, I’m done with it.
Or maybe before then.
But I don’t have as dramatic view. Because, look, we would
have if, in the ’90s talking about Japan,
we all thought it was going to blow up and I guess it has
blown up, but it’s taken- Have they felt it?
Have we felt it? It’s still this morass of-
and they have companies there that are doing great things,
and real estate is still relatively expensive.
And so, the ’08 events, or I’ll put ’97-’98 Asia and then-
those macro crisis events, they’re just-
we already all made our money on that. Like we already
all- we did that.
RAOUL PAL: What you’re saying, it’s the opposite. The
upside is the Bitcoin.
That’s like the complete regime change, much like ’98 in
Asia was, it was complete-
DAN TAPIERO: All the Brit- Yeah, right.
RAOUL PAL: Yeah, it’s an opposite, it’s an upside.
DAN TAPIERO: No, it’s a constant.
RAOUL PAL: Does this mean that macro guys have to become
optimistic? Optimistic, nothing extraordinary.
DAN TAPIERO: I think that they can shoehorn themselves
into this by-
I think within five to eight years, every single hedge
fund will be trading crypto in some form.
Because what’s going to happen is there’s going to be an
entire system that hasn’t been built yet
that is going to grow up around it. For instance, the
lending market- it’s just started.
There’s going to be custody, there’s going to be repo,
there’s going to be people who own Bitcoin and one
it’d be interesting to know what you think about this, but
I’m starting to have this feeling
that Bitcoin might actually not be the thing that gets
spent and used and that it might be something else.
Because everyone in this space, May 22nd is Bitcoin pizza
Everyone knows that that guy spent 10,000 Bitcoin on two
And then you have Winklevoss also talking about how he
paid for his galactic Branson flight with Bitcoin.
And then at the conference just now, a guy said he paid
thousands of Bitcoin for a cup of coffee
in the early days. So, everyone who’s bought or who owns,
like, is hearing these, remembers these stories,
it’s like almost to mean, like, oh, hot, right, you were a
guy who blew 1000 Bitcoin on that.
And I think that’s okay. And that also contributes to the
robustness and strength of the system.
RAOUL PAL: Depends on what ledge is built on top than the
stuff around it.
DAN TAPIERO: Right. But I think that’s all- and I don’t
just mean like the normal financial architecture,
the lending and repo and the collateralization of Bitcoin.
Using it as collateral to be able to buy other things. I
think that’s coming also.
So, I don’t know how it will work. Maybe it is just
Satoshi is that end up getting transferred back and forth.
Or maybe it is Litecoin. Or maybe it is some things that
hasn’t come around yet.
Anyway, I tell everybody who’s under 30, if they’re
looking about something to do,
or their interest, what should I do? Do I go to a macro
Probably not, unless you’re going to be doing something
interesting like this.
RAOUL PAL: Brilliant. It was a really good tour around
some really big concepts
and good idea of old-fashioned macro, the whole thing as
DAN TAPIERO: This is what we do every week anyway. So, I
just came in here to see you face to face.
RAOUL PAL: Perfect. Good to see you and we’ll get back
when Bitcoin’s at 100,000 next.
DAN TAPIERO: And gold at 5000.
RAOUL PAL: Yeah. Okay, that was one hell of a
conversation. Dan is a really old school macro guy.
And he’s about currency crisis and current account and
balances and this stuff.
When Dan comes in almost breathless with excitement about
and how big the entire ecosystem is developing in terms of
I’ve never heard him talk before-
and I’ve actually not heard many people speak before, I
pay attention. This is something truly extraordinary.
And to hear Dan come at it like this,
that it’s like dwarfs all the other opportunities I think
it’s very important.
But it also works with the with the recession narrative
that we’ve talked about.
Dan kindly talked to us about gold and how he sees that
And also, his two-year bond trade, which is the same trade
that I have put on a while ago
and I brought many people in Real Vision through from
October last year, which was the euro/dollar trade.
So, really interesting sale, all of these things come
and how they really could offer us not only a future of
making money over a recession cycle,
but maybe the future on the other side of it, too.